On infra, if you can figure out a set of asset owners which you think will deliver reasonably high returns on capital once the economy improves, I would look at those as well. Metals is what one would start looking at from now because prices are very cheap and so selectively one could look at buying a few metals. All leading metal stocks, like Sterlite or Hindalco, have other businesses which are the main reason for their problems because they either have some projects stuck awaiting environment approval or there are some local issues which are also hurting these stocks.

So if one believes that the government will do what it can, it means all these decisions do not require any policy consensus. So if the government is able to do what it can, then metals stocks might be a pretty good bargain hunt at the current prices.ET Now: That was a very typical sellside pitch, you are no longer part of the sellside group now, you are part of the buyside group now. Where are you investing now?

Pathik Gandotra: I am not buying metals, that is obvious, but I am saying that we should start looking at them.

ET Now: So at what point would you start buying metals because there has been much talk about interest coming back in cyclicals and metals?

Pathik Gandotra: Stocks like Hindalco and Sterlite are looking good, and I will be with the classic buyside argument and start looking at them.

ET Now: So if you have to construct a portfolio, let us say for your clients or for your personal wealth, and it could be combination of largecaps and smallcaps but you are confident that the portfolio could give you 20% growth for the next two or three years, which large, small or midcaps would you like to buy for that portfolio?

Pathik Gandotra: The principle would be to buy stocks which are going to deliver improving returns on capital over the next two to three years. We will take risks but not an outlandish amount of risk, so I will not go and buy a deep value infra stock which has a problem of potential restructuring. We would buy private banks, media. Cable companies look expensive but some of broadcasters look reasonably okay to buy at these prices. Then, one could also do a bit of consumer stocks to hedge the portfolio. Finally, from a risk perspective, I would look at buying old private sector banks and some PSU banks because those are easily manageable risks.

I would just like to caution you on one thing on banks, specifically portfolio construction, which is fine but the point is that you are at a very critical juncture right now. The current juncture says asset quality problems have climaxed. From here on, the view that the economy will recover and there will not be an asset quality relapse. But if large infrastructure companies start restructuring, then there will be a big relapse in asset quality and that will be bad for the entire sector. If that does not happen and if the government gets its act together and if the economy starts recovering, the opposite can happen. So what I am saying is you can shrink big time on the positive or big time on the negative, you are at that critical juncture right now and so.

ET Now: Let us apply that logic to infra names, may be an example of a company with good assets and bad cash flow that could be a multibagger if assets and debts are restructured?

Pathik Gandotra: Assets are still good if you look at Jaiprakash as a group -- their assets are pretty good on cash generation. They have a large amount of debt so if they are able to sell their cement business and get a good cash flow, it can be a very good and powerful stock to look at.

ET Now: Just want your perspective on two more sectors -- IT midcaps, given the rally that we saw, also pharmas such as Wockhardt and Strides Arcolabs. Your thoughts there?

Pathik Gandotra: As long as IT largecaps do not trade, IT midcaps have automatic limits on multiples. Many good companies that have reported good results in the midcap IT space, say KPIT, still have compressed return ratios compared to bellwether largecaps like Infosys. So you would buy these stocks at slightly better multiples.

On pharma, Wockhardt obviously is a case of debt restructuring which has worked. I do not track Strides personally but what I hear is it has got a very good pipeline of injectable drug division which is doing very well and so that stock is good but the risks in Strides, as the analyst community says, is that it has to start delivering numbers. The kicker because of the sale of the business has already happened and that is in the price. So if Strides is able to deliver numbers from here on at a 20%-25% kind of CAGR, then the stock has still more potential to go up.ET Now: There was a zing in your voice the minute you say 'Wockhardt'. Why is that?

Pathik Gandotra: It is a stock which has done very well and so for the sake of declaration I own the stock as well.

ET Now: Are you betting on something in terms of a big concept idea or in terms of a big concept sector?

Pathik Gandotra: We are thinking of media as a sector which can do well. If you want to look at big broad trends which are clearly visible, media is the place where digitisation is happening and that will benefit all the constituents of the media space and it is already reflecting in cable companies which have become quite expensive, but still not completely reflecting in broadcasters. So that is a segment which one would clearly start looking at more closely. Also, pharma. A lot of drugs are going off patent over the next two years so there is plenty of opportunity for the Indian business to do well and, therefore, one should start looking for good stocks to own there.